ImmunoGen's Bright Future

Antibodies have been proven as excellent tools for specifically targeting cancer cells, however, the damage they inflict upon cancer cells is minimal, especially when compared with chemotherapy drugs. According to many observers, including ourselves, the field of cancer antibodies is poised for some exciting changes, as it evolves towards more advanced antibody-based therapies. In our opinion, the inevitable next step is arming antibodies with effector molecules such as protein toxins, radioisotopes and chemotherapy drugs. This may result in superior anti-cancer treatments that possess the specificity of antibodies on the one hand and the potency of chemotherapy on the other. Such treatments, generally referred to as immunoconjugates, are desperately needed, especially for the treatment of solid tumors.

Since we believe the field of immunoconjugates is finally reaching maturity, companies that focus on developing monoclonal antibodies such as Medarex (NEDX), Genentech (DNA) and Imclone (OTC:IMCL) will most likely enjoy the trend, thanks to their experience and broad portfolio of antibodies for cancer. However, companies that specialize in developing immunoconjugates, instead of just "naked" antibodies, represent a more lucrative opportunity. And when it comes to investing in such pure-plays, it doesn't get any better than Immunogen (NASDAQ:IMGN). Because the market for immunoconjugates is still in its early stages, Immunogen bears a high risk, even when compared to other small drug development companies. Nevertheless, Immunogen, which has been developing immunoconjugates for over 25 years, is the best positioned company in the field, as it has gained unparalleled knowledge, experience and intellectual property. Therefore, we expect Immunogen to play a very important role in the antibody market, although the exact timing and dynamics are still vague.

Immunogen focuses on a sub-type of immunoconjugates called "Antibody-Drug conjugate" [ADC], where the antibody is linked to chemotherapy drugs. ADCs are expected to comprise a substantial portion of immunoconjugates that enter clinical stages in the coming years due to their excellent suitability for treating solid malignancies. Upon being injected to patients, the antibody portion of the ADC homes on cancer cells and binds them. Following the binding, the ADC is internalized into the cancer cells followed by release of the drug inside the cell. The chemo drug has no effect when circulating in the blood stream, but only once it is inside the cancer cells.

Radio-immunoconjugates such as Bexxar® and Zevalin®, where the antibodies are conjugated to radioactive molecules, have been proven to be very effective in the treatment of blood cancers but their use for solid malignancies is problematic. The thing with radioisotopes is that they cannot be switched on and off. Since they are constantly emitting deadly radiation, they affect everything they encounter on the way to the tumor. This leads to limitations in the amount of radioactive molecules that can be injected to patients, which is a crucial issue when dealing with solid tumors. ADCs, on the other hand (if properly built), affect only tumor cells and their nearby surroundings, which enables the injection of relatively large amounts of the antibody-drug conjugate. It doesn't mean that radio-immunocojugates cannot be used for the treatment of breast and lung cancers, but only that ADCs are more suitable for this task.

Immunogen realized that the critical point in developing ADCs is the linker that conjugates the antibody to the chemo drug. There are plenty of antibodies that target cancer cells specifically as well as plenty of effective chemo agents, but the biggest challenge is gluing them together. Most importantly, for the drug to be safe, the linker must be very stable inside the blood stream. Then, in order for it to be effective, the drug must be released in its active form once inside the cancer cell. It might sound simple in theory but doing it properly is anything but simple, and for that reason, we believe that Immunogen's proprietary technology is very appealing.

Unlike other groups who develop ADCs, Immunogen does not use traditional chemotherapy drugs such as Taxol and Doxorubicin, but decided to use derivatives of maytansine, which is a much more powerful agent. Because maytansine is such a toxic compound, it cannot be used "as is" due to unbearable side effects. However, when properly linked to an antibody, such a deadly compound may even do a better job killing cancer cells. The derivatives used by Immunogen are patented and can be linked to antibodies via various mechanisms, which should be tailored for each case individually.

Investors should take note of the company's attractive business model, where it develops its own agents on top of licensing its technology to other companies. In an industry where most products fail, it is crucial for any drug development company to be involved in as many projects as possible in order to reduce the risks involved. Immunogen is engaged in the development of its own ADCs and currently has 2 such agents in clinical trials. In addition, they license their products and technology to other companies such as Genentech (DNA) and Sanofi-Aventis (NYSE:SNY). Such partnerships usually involve milestone payments of several tens of millions per product, manufacturing and R&D costs coverage and royalties from future sales. A small company such as Immunogen is limited in the resources it can allocate to each clinical program. Therefore, we see such collaborations as an ideal strategy, which enables the development of a large number of candidates based on Immunogen's technology, with all the development and clinical costs being covered by large partners. Furthermore, the milestone and R&D payments it receives from its partners decreases the need for additional fund raising and dilution, throughout the clinical evaluation process.

Owing to its strategy, Immunogen has an impressive pipeline, with five candidates in clinical development and many more in pre-clinical stages. Notably, only two of the five candidates are exclusively owned and developed by Immunogen (huC242-DM4 and huN901-DM1) with the rest developed and financed by its partners (Herceptin-DM1, in development by Genentech; AVE9633 and AVE1642, in development by Sanofi-Aventis). This article will focus on Herceptin-DM1, with a future article discussing the remaining compounds.

Herceptin-DM1

There is no doubt that Immunogen's most high-profiled candidate is Herceptin-DM1. Its development started back in 2000, as it looked like the perfect candidate for ADC development. Herceptin is an approved block-buster antibody for the treatment of breast cancer. It recognizes and binds the Her2/ErbB2 receptor, which has been strongly validated as a specific and efficient for the targeting of breast cancer cells. In addition, the superiority of Herceptin-DM1 can be easily demonstrated by administering it to patients who do not respond to Herceptin. If Herceptin-DM1 demonstrates a clinical effect among these "Herceptin resistant" patients, it may be the ultimate proof of concept for Immunogen's platform.

Herceptin-DM1 has recently entered a phase II clinical trial, following a phase I trial which was launched in April 2006. The study was designed to evaluate Herceptin-DM1 among patients who had initially responded to Herceptin but then relapsed. In other words, in the beginning, these patient benefited from Herceptin but for some reason, their tumors eventually became resistant to Herceptin. It is important to note that the tumors which became resistant to Herceptin were still recognized by the antibody despite being unaffected by its binding. This leads us to one of the major advantages immunoconjugates have over “naked” antibodies.

One of the biggest problems with developing antibodies for cancer is that most of them have no therapeutic effect by themselves, even if they target and bind cancer cells specifically. As a result, for every Herceptin out there, there are dozens, if not hundreds of antibodies who can bind and recognize specific antigens on cancer cells, but have no therapeutic use. Attaching drugs to those antibodies may turn many of them into very potent agents, regardless of their inactivity as naked antibodies. All of the sudden, those “useless” antibodies turn into an infinite pool of potential drugs, so there is no need to develop new antibodies. That is why, in our opinion, technologies such as Immunogen’s do not only advance the field of cancer antibodies toward safer and more effective treatments, but actually represent a true revolution, as it shortens time-to-market of potential drugs. Since there are so many well studied antibodies that have already been developed and characterized, the resources and time required for bringing such immunoconjugates to the clinic become dramatically lower.

Back to our Herceptin-DM1, Genentech started the phase I in April 2006 and disclosed initial results in December 2006, followed by more updates in 2007. The goal of phase I trials is primarily to evaluate whether the drug is safe, by examining side effects and several doses. When dealing with a potent agent such as DM1, there is always a chance for something to go wrong, but luckily, Herceptin-DM1 did not have any special side effects, even in relatively high doses. In this specific phase I trial, the maximum tolerated dose (NYSE:MTD) was set at 3.6 mg/kg every three weeks. At that dose level, 5 out of 15 patients who received Herceptin-DM1 had a partial response (tumor load went down at least 50% and stayed in remission for at least 6 weeks). Actually, another patient who received a lower dose of 2.4 mg/kg also had a partial response, so if we include her as well, the objective response rate for the two doses is 37.5%.

Since the patients had stopped responding to naked Herceptin, we can safely assume that the broad clinical effect was a result of the potent DM1 infiltrating into the cancer cells following the binding of the Herceptin moiety. Based on historical figures, the overall amount of DM1 that was used in this trial could not have led to this clinical response on its own, so we know the DM1 was targeted to tumors specifically.

In addition, Herceptin-DM1 had a favorable safety profile, since a clinical effect was achieved with relatively minor side effects. This implies the linker which glue the antibody to the drug is fairly stable in the blood stream.

Finally, the patients who participated in this trial had undergone numerous chemotherapy treatments and saw their cancer relapse prior to receiving Herceptin-DM1. Thus, their disease was in a very advanced and aggressive mode. It is likely that the drug would be more effective in earlier disease stages and less pretreated patient population. Although we view these results as very positive, we must admit we had expected a more potent activity by this promising candidate.

The reason for our extremely high expectations was the high potency of DM1 and promising pre-clinical results of Herceptin-DM1. When Herceptin-DM1 and Herceptin were evaluated for the treatment of mice bearing Herceptin-resistant tumors, Herceptin alone had no effect on tumor growth, while Herceptin-DM1 caused >90% tumor reduction in all mice examined. In addition, earlier pre-clinical studies showed that DM1 conjugates were +1000-fold more potent than naked Herceptin against breast cancer cell lines. Herceptin is dosed at 2 mg/kg per week, while in the phase I trial, T-DM1 was injected every 3 weeks at a dose of 3.6 mg/kg. This puts Herceptin-DM1’s clinical activity in a somewhat unflattering light.

Make no mistake, Herceptin-DM1 still has very promising prospects as it managed to show a significant effect where all other alternatives failed. Obviously, small phase I trials' results are not reliable for deciding whether a drug candidate is effective or not. Still, the fact that the candidate had an effect among 37.5% of Herceptin-resistant patients is an extremely important indication. Although not as bright as we had expected, Herceptin-DM1 is still the jewel in the crown of the cancer antibodies field.